That deal calls for Accel-KKR to pay roughly $124 million for SumTotal’s shares. Under the terms of the Accel-KKR-SumTotal pact, SumTotal must now negotiate for three business days with Accel-KKR.

The bidding war for Mountain View, California-based SumTotal could amount to a shot in the arm for HR software sellers and customers alike amid a sickly economy. Higher valuations for human resource software companies help everyone in the HR software industry, says Josh Bersin, head of research firm Bersin & Associates.

Vendors have access to more capital, buyers get more sustainable vendors and investors feel more comfortable with the industry, he says.

“Everybody benefits,” he says.

SumTotal sells learning management systems and other talent management tools. Such products have been among the fastest-selling business software applications.

However, the recession has slowed sales. Bersin & Associates initially forecast that talent management software spending would rise 20 percent in 2008 to $2.3 billion. But the final tally was just shy of $2 billion, representing 16 percent growth, the firm says. For 2009, Bersin predicts a rise of about 14 percent to $2.26 billion.

SumTotal posted a first-quarter net loss of $5.2 million, compared with net income of $1.5 million for the first quarter of 2008. Revenue fell 34 percent year-over-year to $23.7 million.

Escalating bids for SumTotal took off the afternoon of April 3. That’s when Vista, which has offices in San Francisco and Chicago, offered $3.25 per share for the company. Just before that proposal, SumTotal shares were trading at $2.01.

On April 24, SumTotal announced a pact to be acquired by Accel-KKR, which has offices in Menlo Park, California, for $3.80 a share. But the agreement allowed SumTotal to solicit alternative acquisition proposals through May 23.

On May 6, Vista upped its bid to $4.50 per share, or a total of $146 million. Earlier this week, SumTotal’s board called that offer a superior proposal to the Accel-KKR deal as well.

If SumTotal goes with the Vista offer after talks with Accel-KKR, the vendor would have to pay a $6.7 million fee.